Question

as of December 31, 2020, was as follows: Common stock, par value $2; authorized 20,000 shares; issued and outstanding 10,000 shares $ 20,000 Paid-in capital in excess of par 30,000 Retained earnings 85,000 Total Stockholders' Equity $135,000 On March 1, 2021, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. On March 1, 2021, the fair value of the stock was $6 per share. For the two months ended February 28, 2021, Firm ABC sustained a net loss of $15,000. What amount should Firm ABC report as retained earnings as of March 1, 2021

Answer 1

$ 61,000

Step-by-step explanation:

Calculation for the amount that Firm ABC should report as retained earnings as of March 1, 2021

Retained earnings Balance $ 85,000

Less: Shares issued ($9,000)

(1500 *$6 per share)

Less: Net Loss ($15,000)

Ending Balance $61,000

Therefore the amount that Firm ABC should report as retained earnings as of March 1, 2021 will be $61,000